Structuring a businessorganization to reduce exposure to self-employment tax incidence
By William Alexander
Business and Securities Law,
April 2001
So long as it is possible to structure payments as due to the organization in general, and not to the organization as fees for work that must be performed by an investor individually, use of a corporation with subchapter S election, rather than a limited liability company, would appear to minimize self-employment tax, while retaining pass-through tax treatment (no entity level tax would apply.)
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